SETCO - Setco Automotive

📊 NSE: SETCO 🏢 Auto Ancillaries 📅 Last Updated: 12/14/2025 13:02

💰 Financial Performance

Revenue Growth by Segment

Consolidated revenue from operations grew 12.2% YoY to INR 718.6 Cr in FY25, up from INR 640.7 Cr. The Aftermarket segment was a primary driver, growing 31% YoY and contributing 15.6% of total revenue. Standalone revenue was minimal at INR 2.73 Cr following the transfer of the clutch business to its subsidiary.

Geographic Revenue Split

International operations are key drivers: North American (SANAI) sales grew 6% YoY with 12% EBITDA margins. European (SAUL) sales grew 2% YoY, though EBITDA remained negative. The company also operates in the Middle East via Setco MEA DMCC.

Profitability Margins

The company reported a consolidated Net Loss of INR 126.33 Cr in FY25, a slight improvement of 4.95% from a loss of INR 132.58 Cr in FY24. Profitability is severely impacted by high finance costs of INR 217.41 Cr, which increased 21% YoY, exceeding the operating profit.

EBITDA Margin

Consolidated EBITDA grew 50.7% YoY to INR 109.2 Cr in FY25, up from INR 72.5 Cr. The EBITDA margin improved to approximately 15.2% from 11.3% in the previous year, driven by higher-margin aftermarket sales and export growth.

Capital Expenditure

Not explicitly disclosed in absolute INR Cr for the current period, but the company is investing in 'State-of-the-Art' manufacturing and R&D capabilities in the UK and India to support new product ranges.

Credit Rating & Borrowing

The company was assigned an [ICRA]D rating in June 2021 due to irregularities in servicing bank debt. While the rating was withdrawn in December 2021 after debt was transferred to the SASPL subsidiary, liquidity remains stretched with consolidated finance costs at INR 217.41 Cr.

⚙️ Operational Drivers

Raw Materials

Specific raw materials include iron castings (sourced from subsidiary Lava Cast), steel, and friction materials for clutch manufacturing. Castings represent a significant portion of the input for the clutch and flywheel lines.

Import Sources

Sourced domestically in India (via Lava Cast Pvt Ltd) and internationally to support manufacturing hubs in the UK and North America.

Key Suppliers

Lava Cast Private Limited (subsidiary) is a primary supplier of castings. Other third-party vendors for steel and friction components are utilized but not named.

Capacity Expansion

Current capacity is not stated in units, but the company is expanding its 'Setco Allied Products' line to include flywheels, bearings, brakes, and lubricants to utilize existing distribution channels.

Raw Material Costs

Not disclosed as a specific percentage of revenue, but the company is implementing proactive cost-reduction steps in its European operations to offset negative EBITDA.

Manufacturing Efficiency

The company utilizes 'State-of-the-Art' facilities and an R&D hub in the UK (SAUL) to improve product life and performance, specifically for the LIPE brand.

Logistics & Distribution

The company uses a global distribution network with hubs in the UK, USA, and Dubai to serve the European, North American, and Middle Eastern markets.

📈 Strategic Growth

Expected Growth Rate

7-9%

Growth Strategy

The company is transitioning to an aftermarket-focused enterprise to reduce OEM dependency. Strategy includes launching 'Setco Allied Products' (bearings, brakes, lubricants), expanding the LIPE brand in Europe, and developing a new range of clutches for the North American market to augment existing business.

Products & Services

Clutches for M&HCV and LCV, flywheels, bearings, brakes, lubricants, and oil.

Brand Portfolio

LIPE, Setco, Setco Allied Products.

New Products/Services

Launched 'Setco Allied Products' including flywheels, bearings, brakes, and lubricants to complement the core clutch portfolio.

Market Expansion

Targeting the North American market with a new range of clutches and the European market through new distributor setups under the SAUL subsidiary.

Strategic Alliances

Maintains six global subsidiaries including Setco Auto Systems Pvt Ltd (SASPL) and Lava Cast Pvt Ltd.

🌍 External Factors

Industry Trends

The industry is shifting toward organized spare parts and preventive maintenance. Vehicle parc expansion and the increasing average age of vehicles are driving a 31% growth in the company's aftermarket segment.

Competitive Landscape

Competes with global and domestic clutch manufacturers in the OEM and IAM segments.

Competitive Moat

Moat is built on 40+ years of excellence, the established 'LIPE' brand, and a dominant position in the Indian M&HCV clutch market. Sustainability is supported by a shift to the less cyclical aftermarket.

Macro Economic Sensitivity

Highly sensitive to infrastructure spending and GDP growth, which drive M&HCV demand. The Indian auto component industry's 7-9% growth forecast for FY26 is a key benchmark.

Consumer Behavior

Shift toward higher-quality, branded spare parts in the organized aftermarket to ensure vehicle uptime in the commercial sector.

Geopolitical Risks

Exposure to trade barriers and economic uncertainty in European and North American markets where subsidiaries operate.

⚖️ Regulatory & Governance

Industry Regulations

Complies with the Companies Act 2013 and SEBI Listing Regulations. Operations are subject to automotive safety and manufacturing standards in India, the UK, and the USA.

Environmental Compliance

Not disclosed in absolute INR.

Taxation Policy Impact

Consolidated tax provision was a credit of INR 2.85 Cr in FY25 compared to a credit of INR 6.23 Cr in FY24.

Legal Contingencies

The company has extended the redemption date for NCDs worth INR 574.50 Cr multiple times, with the latest extension to December 1, 2025, following agreements with debenture holders and trustees.

⚠️ Risk Analysis

Key Uncertainties

Liquidity risk is the primary uncertainty, evidenced by the [ICRA]D rating and the need to extend NCD redemptions. Potential impact is a 100% disruption of credit facilities if defaults occur.